During the pandemic years, America experienced one of the most dramatic migration waves in modern history. Millions of people left expensive coastal cities and relocated to booming Sunbelt markets in search of cheaper housing, lower taxes, more space and a different lifestyle. Remote work untethered workers from traditional job centers almost overnight, while mortgage rates around 3% gave buyers unprecedented purchasing power. 

Austin became a symbol of the tech migration boom. Miami transformed into a finance and crypto capital. Phoenix, Tampa, Nashville and Dallas saw enormous inflows of both people and capital. Investors poured billions into Sunbelt apartments and single-family rentals under the assumption that migration trends would continue indefinitely. Housing prices surged because buyers believed these markets would remain permanently undersupplied and permanently desirable.

But that assumption has been upended; the migration story is changing.

A recent report from the Bank of America Institute suggests that the pandemic migration boom is cooling significantly and that the next phase of American migration may look very different from the last several years. In its report, “On the Move: U.S. Migration Patterns,” Bank of America notes that “moves have slowed significantly from pandemic peaks” and that “affordability is becoming an increasingly important driver of migration decisions.”

From the report:

This shift may define the housing market for the rest of the decade.

The pandemic years were driven largely by aspirational migration. Americans moved toward lifestyle upgrades. They wanted larger homes, warm weather, lower taxes, bigger backyards and a different pace of life. Housing became emotional and speculative at the same time. People feared missing out on the next great boomtown. Investors believed migration into the Sunbelt represented a permanent structural change rather than a temporary cycle amplified by cheap money and remote work.

Today, migration is becoming more defensive and affordability-driven.

People are still moving, but increasingly they are moving because they have to, not because they want to reinvent their lives. Rising insurance costs, elevated mortgage rates, property taxes, rent burdens and general cost-of-living pressures are now shaping migration decisions far more than lifestyle aspirations. Instead of chasing “hot” cities, many households are simply searching for places where they can still afford a reasonable quality of life.

This is a major shift.

During 2020 and 2021, the narrative surrounding migration was built around optimism. Americans believed they could upgrade their lives by relocating. Now the migration narrative is increasingly about financial pressure and economic constraint. The distinction matters because affordability-driven migration tends to be slower, more cautious, and less speculative than the explosive migration patterns seen during the pandemic boom.

Many of the hottest housing markets from the pandemic years are already beginning to cool. Austin, once one of the fastest-growing housing markets in the country, has seen rents soften significantly after a massive construction boom. Phoenix inventory has risen sharply from pandemic lows. Nashville and Tampa are seeing slower migration momentum than they experienced during the height of remote-work relocation. Miami, which became one of the ultimate pandemic boomtowns, is now appearing in some datasets as a net domestic outflow market.

This does not mean these cities are collapsing. Most remain economically vibrant and attractive long-term markets. But the extraordinary conditions that drove pandemic-era migration are fading. The assumption that these markets would see endless inbound demand is now being challenged.

One of the biggest reasons is simple: many of the places people moved to for affordability became unaffordable.

Austin illustrates this perfectly. The city attracted thousands of remote workers and technology employees fleeing higher-cost areas like California. But after years of surging demand, home prices and rents exploded. Property taxes climbed. Infrastructure became strained. Inventory surged as developers raced to keep up with demand. Eventually, much of the original affordability advantage disappeared.

Florida tells a similar story on an even larger scale. During the pandemic, Florida represented the idealized vision of post-pandemic America: low taxes, open economies, warm weather and rapid population growth. But over time, housing costs surged so dramatically that affordability pressures began to undermine the very migration trends that fueled the boom in the first place. Insurance premiums skyrocketed across the state, especially in coastal markets. 

HOA fees and condo costs surged after new regulations following the Surfside condominium collapse in 2021 that killed 98 people. Climate and hurricane risks became more financially visible. Home prices increasingly detached from local wage growth.

The result is that migration patterns are beginning to normalize.

Americans are increasingly moving within their own regions, a trend that the Bank of America report highlights. Instead of moving from New York to Texas or California to Florida, more people are relocating shorter distances in search of incremental affordability improvements. Households are looking for cheaper suburbs, smaller nearby cities or lower-cost areas within the same broader region rather than making dramatic cross-country moves.

The U.S. has historically been an extremely mobile society. Americans moved frequently in pursuit of jobs, opportunity, affordability or upward mobility. High levels of geographic mobility helped labor markets adjust dynamically and allowed economic growth to spread across regions. But the current housing environment is increasingly discouraging mobility altogether.

The mortgage “lock-in effect” is one of the defining forces in the market. Millions of homeowners refinanced into ultra-low mortgage rates during the pandemic years. Those homeowners are now reluctant to move because replacing a mortgage of around 3% with one that is above 6% dramatically increases monthly housing costs, even for a home in the same price range. As a result, transaction volumes remain historically weak even while home prices stay elevated.

In many ways, the market has taken on a stagnant nature, a far cry from a boom or crash.

That is why housing analysts and economists are making comparisons to Japan. After its real estate bubble burst in the early 1990s, Japan entered a long period defined by low mobility, demographic decline, regional divergence and weak speculative demand. Property markets did not collapse uniformly overnight. Instead, many areas experienced decades of stagnation, weak transaction activity, and declining economic dynamism.

The United States is not Japan, and there are important differences between the two economies. But some parallels are becoming harder to ignore. The U.S. is dealing with aging demographics, declining affordability, slower household formation, elevated housing costs, and increasingly uneven regional growth. The explosive migration patterns of the pandemic may ultimately prove to have been a temporary distortion created by remote work and ultra-cheap money rather than a permanent reshaping of American geography.

Perhaps the most important takeaway from the Bank of America report is that the migration trade itself may be ending.

For years, investors treated migration into the Sunbelt as an unstoppable trend. Apartment developers built aggressively under the assumption that population growth would remain elevated indefinitely. Institutional investors bought thousands of homes expecting permanent rent acceleration. Short-term rental operators expanded rapidly into vacation-heavy boom markets believing occupancy rates would stay near peak levels forever.

Affordability matters again. Cash flow matters again. Local wages matter again. The housing market is becoming less narrative-driven and more constrained by economic reality.

The next phase of the housing market may not be defined by dramatic crashes or euphoric booms. Instead, it may be defined by slower growth, lower mobility, and increasing regional fragmentation. Markets with strong employment bases and reasonable affordability may outperform expensive boomtowns that became overbuilt or overvalued during the pandemic years.

The pandemic migration boom was fueled by flexibility. The next era may be shaped far more by financial limitations and economic caution.

That is a profound shift for the American housing market, because housing has always reflected more than economics alone. During the pandemic years, Americans believed moving could transform their lives. Increasingly, Americans are now moving simply to preserve affordability.

For older folks, counting on the sale of a house to ease financial stress is no sure thing. A report from the Philadelphia Fed found that older people often sell their homes for lower prices than younger people, often because they have deferred maintenance that causes buyers to make lower offers. Older people are also more likely to sell their house without listing it to the MLS, or sell to investors, which also leads to lower prices. This can limit options for an older person, with less money to move to a desirable retirement community, or to buy a more age appropriate home. Sellers 70 and up earn lower returns than their younger homeowners, and the gap increases with age; an average 80-year-old seller would likely get paid 5 percent less than a 45-year-old, all other factors being equal.

Jacksonville topped a recent survey as the best place to buy for first-time homeowners, followed by Birmingham, San Antonio, Atlanta and Houston. Zillow ranked housing markets based on what matters most to households trying to buy their first home: rents taking up a smaller share of budgets, affordable homes making up a larger share of listings and less competition for homes.bSeveral Sun Belt metros rank highly because inventory conditions have improved, giving buyers more choices. Meanwhile, many Midwest metros continue to stand out because home values remain relatively accessible compared with incomes, helping keep more listings within reach of first-time buyers.

JUST BECAUSE

A team from Princeton University built an experimental house made of straw, because isn’t that something that we all tried in college? Paul Lewis, an architecture professor at Princeton, believes that straw — the readily available leftover stalks of grains such as wheat and rice — is a natural insulator that can serve as a cottage’s frame, walls and insulation. He and his team built a tiny home on land near Hudson, N.Y., about 120 miles north of New York City. “The theory of modern architecture is that when there’s a material, it eventually evolves into a form,” Guy Nordenson, a professor of engineering and architecture at Princeton who worked on the project with Lewis, told The New York Times. A company in Sweden, EcoCocon, had taken that form to greater heights. It recently built a 12-story building in Malmö using its wood-fibre and straw insulation system, one of its more than a dozen projects around that world constructed with its sustainable methods.

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